Toyota Motor Company announced they have formalized an agreement to develop an electric version of the RAV4 SUV with Tesla Motors.

In May 2010, Akio Toyoda and Elon Musk, leaders of Toyota and Tesla, respectively, announced they would work together on electric vehicles. The agreement formalizes this announcement and would allow Tesla to work with Toyota at an automobile production plant in California.

2009 RAV4.

The plant will open 2011, when Tesla reopens it after it bought the Fremont, California plant. The plant was previously used by Toyota and General Motors, but was shut down when Toyota said it would not produce cars in California.

Tesla currently produces only a single model, the US$109,000 Roadster, although it is currently designing a second model, the Model S, which will be produced at the Fremont factory.

Analysts supported the move; John Boesel, CEO of a green-transportation trade group, said that “Toyota’s willingness to partner with Tesla to provide an electric version of one of the Japanese automaker’s existing vehicles suggests the partnership between the two companies is going to be a meaningful one.”